Perspectives on ESG Materiality in the Engineering and Construction Industry: An Exploratory Study

Environmental, social, and governance (ESG) criteria are an emerging consideration for the engineering and construction (E&C) industry. Although these criteria are gaining traction, existing research has not evaluated existing guidelines and recommendations for ESG criteria specifically within the context of the E&C industry within the United States. Therefore, the objectives of this research were to identify ESG metrics material to the US E&C industry, to investigate which ESG metrics were self-reported within the US E&C industry in fiscal years 2021 and 2022, and compare these self-reported metrics to the recommended ESG metrics. Researchers implemented a qualitative research approach to evaluate existing ESG guidelines and recommendations from the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI) to develop a consolidated ESG metrics list material to the E&C industry. Then researchers analyzed six publicly available ESG and sustainability reports from the largest US-based E&C companies by revenue according to the Fortune 500 list to determine which ESG metrics were reported by companies with substantial resources to invest in disclosure operations. The outcome of this analysis was an understanding of which self-reported metrics were aligned with the consolidated ESG metrics list as recommended by the three standards organizations and what other metrics were reported by E&C companies. These findings provide clarity into which ESG metrics are potentially material to the E&C industry as defined by guidelines, recommendations, and by the industry itself. Practically, this research provides the E&C industry with a consolidated ESG metrics list. Further, this research contributes to the body of knowledge by specifically identifying ESG metrics material to the E&C industry, while identifying discrepancies between guidelines and recommendations and what the industry is currently reporting.